HMRC IHT receipts down in April but still ‘unusually high’
23 May 2019
Inheritance tax receipts decreased by £64 million in April but were still significantly higher than in the same period of last year, the latest figures from HM Revenue and Customs have shown.
In April, IHT receipts totaled £473 million, down from £537 million in March, marking a drop of 12% month on month. However, IHT paid in April was 11.2% higher than in the same period last year, although HM Revenue & Customs said it was too early to determine the cause.
Rachel Griffin, tax and financial planning expert at Quilter, said that despite the decline in receipts last month, the inheritance tax take per month continues to hover in the upper range of where it has been in previous years, suggesting that near or over £500 million per month has become the new norm.
She said: “HMRC coffers didn’t benefit as much in April, however they still note that April’s receipts were unusually high and they are unsure of the case. This should raise a big question mark over the success of the residence nil band rate, which was supposed to bring IHT levels to where they were at in the 2014/15 tax year. While the threshold will steadily increase over the next number of years, current signs are not encouraging.”
Griffin said the failure of receipts to reduce over the past two years could be down to a number of factors, including house prices continuing to reside above the current residence nil rate band threshold or people not leaving their property to blood relatives, which is a restriction required to benefit from the RNRB. Griffin said that the preparation of a second review into IHT by The Office for Tax Simplification offers an “ideal opportunity” to fix the outdated allowance.
She added: “One of the reasons this allowance isn’t hitting the Treasury’s balance sheet too heavily is because it is so restricted. It omits close to 6 million cohabiting couples. It is reassuring that the Treasury says all options are still on the table. There will be a price to pay for simplicity, but its value will be exponential.”
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